Court Allows Rambus-Infineon Case To Proceed

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A federal appellate court has tossed out a lower-court ruling against Rambus Inc., eliminating a fraud charge and allowing the company’s patent-infringement case against Infineon to proceed.

The U.S. Court of Appeals for the Federal Circuit eliminated the fraud charge “because substantial evidence does not support the implicit jury finding that Rambus breached the relevant disclosure duty during its participation in the standards committee.”

The court case dates back to August of 2000, when Rambus filed suit against Infineon for patent infringement. Rambus has filed similar suits against Micron Technology and Hynix Semiconductor; the Hynix suit has been stayed until the Infineon case is resolved.

The ruling addresses a lower court’s finding that Rambus withheld relevant patents from the JEDEC standards committee while the standards body deliberated next-generation technologies. Those memories, which later became synchronous DRAM and DDR, are allegedly based upon proprietary Rambus technology, according to Rambus.

Soon after SDRAM was introduced into the market, Rambus began filing suits against smaller DRAM vendors, and convinced companies like Mitsubishi to pay royalty fees on both synchronous and Rambus memory. Larger vendors, such as Infineon and Micron, filed countersuits, alleging that Rambus’ actions in the JEDEC council violated the tenets of U.S. patent law. Rambus also has claimed that its patents apply to logic devices which use memory interfaces, or virtually all computers and semiconductors.

In the majority ruling issued by Judge Randall R. Rader, the court found that Rambus had no obligations to disclose either its patent applications or claims, based upon the vague wording of the JEDEC bylaws and their enforcement. The ruling was predicated upon a prior case between Signet Bank and the Bank of Montreal, where a company’s decision to withhold information was perfectly legal in the absence of a requirement to disclose that information.

Moreover, the court found that Infineon engaged in the same patent-withholding practices it claimed Rambus had illegally pursued.

In a dissenting opinion, however, Judge Sharon Prost found that Rambus had also demonstrated clearly fraudulent behavior on several occasions.

The court cited the Electronics Industry Association/JEDEC bylaws, which state: “Standards that call for the use of a patented item or process may not be considered by a JEDEC committee unless all of the relevant technical information covered by the patent or pending patent is known to the committee, subcommittee, or working group.”

JEDEC instructed the chairman of each of the meetings to disclose the patent language to its members, and the court found through testimony that the chairmen did indeed comply with the instructions.

The problem, however, is that the majority of the members, including Rambus, did not. “Under such an amorphous duty, any patent or application having a vague relationship to the standard would have to be disclosed,” Judge Rader wrote for the court. “JEDEC members would be required to disclose improvement patents, implementation patents, and patents directed to the testing of standard-compliant devices — even though the standard itself could be practiced without licenses under such patents.”

Moreover, among all of the sixty or so attendees — including such tech heavyweights as IBM, Toshiba, Intel, AMD, Samsung, Siemens, Hyundai, Micron, Sun Microsystems, Hewlett-Packard, Hitachi, Motorola, LG Semicon, and Fujitsu — only five applications and sixty patents were disclosed.

“If these members perceived the duty to encompass any patent or application with a vague relationship to the JEDEC standard, the record would likely contain a substantially greater number of disclosed patents and applications,” the court found. “Even Infineon’s own actions demonstrate that the disclosure duty was not so broad because Infineon itself did not disclose to JEDEC an application on testing SDRAM.”

The court concluded by finding JEDEC itself guilty of “a staggering lack of defining details” in the JEDEC patent policy.

Rambus will not have to pay Infineon $7 million in penalties, and both sides will pay their own court costs. The ruling caps a fine day for Rambus, which will benefit from an unexpected four-channel chipset developed by SIS.

“Today’s rulings are not just about Rambus,” said John Danforth, senior vice president and general counsel of Rambus, in a statement. “They greatly illuminate a wide range of issues related to standards setting and intellectual property. We believe that the Federal Circuit has done a thorough job of clarifying these issues and that their work merits close attention.”

The Federal Trade Commission also has an ongoing investigation into Rambus’ actions within the JEDEC council, although it is unclear what effect Wednesday’s ruling will have.

In her dissenting opinion, Judge Prost found that Rambus had attended JEDEC meetings with the clear intention of incorporating JEDEC discussions into the company’s own patent claims.

“The record is replete with additional and specific instances of Rambus employees attending JEDEC meetings, taking notes of what was discussed, identifying instances where Rambus already had claims covering what was discussed, and then seeking claims to cover what they learned at the JEDEC meetings,” Judge Prost wrote, citing testimony delivered by Richard Crisp, the Rambus representative to JEDEC.

The company’s actions meet the definition of fraud, Judge Prost found.Even after Rambus had pulled out of JEDEC, two anonymous sources, dubbed “Deep Throat” and “Secret Squirrel”, continued to provide information, Judge Prost wrote. Rambus then tried to destroy or otherwise hide relevant evidence of its actions within JEDEC, providing false testimony, she wrote.

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